Prepare a budgeted balance sheet (net assets equal equity format) for Prime & Vans at 31st December 2022.
Do a cost-volume profit analysis: calculate the break-even point in sales revenues and the margin of safety in sales revenues for the business. Briefly comment on your results explaining to Rick and Joanne the meaning of these two concepts.
Maximum 200 words. Task 1: Total 40 marks.
Business report about the company business plan.
Your report addressed to Rick and Joanne should include the following:
Critical analysis of the business plan assumptions. Use your results of task 1 to evaluate critically the assumptions made by Rick and Joanne in the business plan. You need to include evidence of competition analysis, demographic analysis and characteristics of the location to evaluate the owners’ assumptions (you need to do a data search for this type of information).
Analysis of the impact of the business plan on the company profitability, liquidity and sustainability. Use your results of task 1 to answer these questions: does the company generate contribution margin and profit? In terms of liquidity, how the net cash flow and the closing balance are evolving during the year and how much cash is necessary to fund the first year of business? Can the company survive in the short-term? Can it be solvent and grow in the long-term? Discuss pros and cons of multiple sources of finance that Rick and Joanne could use to obtain the necessary funds.
Your recommendations and advices to Rick and Joanne for establishing a successful business. Provide them with your own advices. Consider strategic, marketing and financial aspects. Will Rick and Joanne be able to expand the business and buy the two new vans in January 2023?